NEWS AT A GLANCE
Chrysler and Nissan look at joint midsize cars
Chrysler LLC is reportedly in talks with Japan’s Nissan about jointly making midsize cars for the U.S. market. Under the deal, Nissan would make midsize sedans that Chrysler would sell under its own brand name, in a big departure from Chrysler’s business model. Chrysler is focusing its engineering resources on its areas of expertise—trucks, SUVs, and minivans. The two automakers already have a deal in which Chrysler will make a full-sized pickup for Nissan and Nissan will make a subcompact car for Chrysler. This is the model used by companies like Dell, but when people can just buy the Nissan version, success “comes down to marketing and branding,” says analyst Michael Ward at Soleil Securities Group. (The Wall Street Journal)
AIG posts $5.36 billion loss
American International Group, the world’s largest insurer, reported a $5.36 billion quarterly loss, on housing-related writedowns and other losses. The loss, AIG’s third straight quarter in the red, was worse than expected, and AIG shares lost 7.7 percent in extended trading. (AP in Yahoo! Finance) AIG wrote down $5.56 billion, pretax, in the value of credit default swaps—a type of insurance against defaults for bondholders—and $6.08 billion in the value of other mortgage-backed investments. (MarketWatch) “It was a pretty horrific quarter, just scary,” said analyst Donn Vickrey at Gradient Analytics. (Bloomberg)
Toyota gets dented by U.S. slump
Toyota reported a 28 percent drop in quarterly profit, to $3.23 billion, as the stronger yen, weaker sales in North America and Europe, and rising raw material costs hit its bottom line. (MarketWatch) European sales dropped by 9.6 percent, and North American sales were down by 4.3 percent. Still, Toyota said it gained U.S. market share in the quarter, to a record 17.4 percent. (AP in Yahoo! Finance) Toyota is better off than its U.S. rivals because it depends less on SUVs and trucks. But SUVs and trucks have higher profit margins than small cars. “Toyota can’t escape a terrible market,” said Fumiyasu Sato of Milestone Asset Management. “Truck demand will keep shrinking and the shift to small cars will accelerate.” (Bloomberg)
Coke’s secret formula, a tiny bit less secret
Coca-Cola’s secret recipe dates back to 1886, when Atlanta druggist John Pemberton created it, and Coke wants you to know that the formula doesn’t call for any added preservatives or artificial flavors. In a new ad campaign being rolled out worldwide, designed to counter widespread beliefs that Coke is unhealthy and unnatural, Coke is divulging some hints about the recipe: It contains spices from around the world, and it hasn’t changed in 122 years. Soft drinks like Coke, as they lose ground to bottled water and tea drinks, “are having to work out what their future looks like in this very health- and diet-obsessed world, and it is a source of considerable anxiety,” said Jasmine Montgomery at consultancy FutureBrand. (The New York Times)
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